Amazon.com is closing dozens of Amazon Fresh physical stores and automated Amazon Go outlets to focus on expanding its same-day grocery deliveries to more locations and adding to its Whole Foods Market operations.
The e-commerce retailer admitted in a blog post on Tuesday that although it has seen “encouraging signals” in its Amazon-branded physical grocery stores and “gathered valuable insights” about customer preferences, “we haven’t yet created a truly distinctive customer experience with the right economic model needed for large-scale expansion.”
Amazon will convert some of the locations to Whole Foods stores, as part of plans to open 100 or more Whole Foods Market locations in the next few years.
Amazon’s stock was up 2% to around $243 in early afternoon trading, while the S&P 500 was up 0.5%. The stock is up about 5.5% this year and up 2.2% over the past 12 months.
Walmart’s stock was down 0.5% in afternoon trading, while Instacart was down nearly 6%.
Amazon has battled for grocery sales market share with Walmart, which has 4,000 stores. Amazon calls itself one of the top three grocers in the U.S., with more than $150 billion in gross sales and more than 150 million customers shopping for groceries each year.
Mizuho analysts led by David Bellinger said developing a larger fulfillment network could help Amazon push its market share into the mid-single digit range over the next two to three years from an estimated 3% in the category now. But the analysts also note that for the 12 months ended in June 2025, grocery rival Kroger had about 8.5% market share of grocery spending, Costco had about 8.4%, and Publix had 4.1%.
Mizuho sees a limited impact from Amazon’s move on Costco, which caters to a different kind of shopper who buys in bulk. Costco’s warehouse format is less dependent on online grocery purchases, the analysts said.
For Amazon to truly go up against Walmart’s 20% share, “we see something larger and more disruptive as necessary,” the analysts said in a research note.
Some of its strategy shift is already in motion. Amazon is testing new retail formats, including a supercenter concept in suburban Chicago that will offer groceries, household products, and general merchandise, an idea that Mizuho said was very much focused at Walmart.
Amazon operated about 60 Amazon Fresh stores and about 15 Amazon Go locations, Mizuho said.
The renewed focus on online-driven delivery “is a heavy lift and massive structural limitation vs. the 4,000+ Walmart store locations,” Mizuho said.
Amazon said shoppers will still be able to buy produce, dairy, meat, baked goods, and frozen foods along with millions of everyday household items, electronics, and other Amazon.com products, “all delivered within hours.” It said sales of perishable groceries through its same-day delivery operation have grown 40-times since January 2025, and that fresh groceries now make up nine of the top 10 most-ordered items in markets where perishables are available for same-day delivery.
Five of the new Whole Foods locations will be smaller-format Whole Foods Market Daily Shops, with prepared meals, coffee, and everyday items. Amazon bought Whole Foods in 2017 and has expanded it to more than 550 locations.
Amazon said the “Just Walk Out” technology it developed at its Amazon Go locations, allowing them to center on an automated grab-and-go format, has been “transformative.” It operates the technology in 360 third-party locations including hospitals and sports arenas.
It is expanding that technology internally to breakrooms at more than 40 Amazon fulfillment centers in North America, “helping employees maximize break time,” with more planned for this year.
Amazon will report its fourth-quarter and 2025 financial results on Feb. 5.
Write to Janet H. Cho at janet.cho@dowjones.com